Telangana High Court
Spandana Rural And Urban Development ... vs Commissioner Of Income Tax Exemptions on 4 November, 2025
THE HON'BLE THE CHIEF JUSTICE SRI APARESH KUMAR SINGH
AND
THE HON'BLE SRI JUSTICE G.M.MOHIUDDIN
WRIT PETITION No. 33131 of 2025
ORDER:
Heard Ms. Akruti Agarwal, learned counsel appearing
for petitioner; Mr. Vijhay K Punna, learned Senior Standing
Counsel for Income Tax appearing for respondent Nos.1 to 3
and Sri B. Mukherjee, learned counsel appearing for
Sri N. Bhujanga Rao, learned Deputy Solicitor General of
India for respondent No.4.
2. Earlier, the order dated 23.08.2025 passed by respondent
No.1 - Commissioner of Income-tax (Exemption), Hyderabad
(for short 'CIT (Exemption)'), granting a conditional stay of
the demand on making partial payment of Rs.8.00 crore on or
before 01.09.2025 in relation to the proceedings for recovery
of taxes for the Assessment Year 2023-24 during pendency of
the appeal was set aside by this Court vide order dated
23.09.2025 in Writ Petition No.28734 of 2025 and remanded
to CIT (Exemption) to pass a fresh speaking order after
considering the grounds raised by the assessee in its stay
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petition. Detailed speaking order dated 13.10.2025 passed
thereafter by CIT (Exemption) whereby the petitioner was
directed to deposit Rs.8.00 crore, which is less than the CBDT
guidelines of 20%, on or before 28.10.2025 for the Assessment
Year 2023-24 is under challenge in the present Writ Petition.
The relevant part of the said order is extracted hereunder.
"7. The submissions made by the assessee have been duly considered.
However, the request for stay of collection of taxes without any payment
cannot be accepted for the following reasons:
1. Mere pendency of appeal does not warrant automatic stay of
demand. As per settled principles of law, unless the assessee
demonstrates a strong prima facie case and financial hardship, stay of
demand without payment cannot be granted.
2. The assessee has not provided any documentary evidence to
substantiate the claim of financial incapacity or to demonstrate that
any steps have been taken to raise funds to meet the tax demand
partially.
3. The high-pitched nature of the demand alone is not sufficient
ground for granting stay, particularly when there is no material
provided to establish that part-payment is not possible under any
circumstances.
4. The Assessing Officer, in the assessment order, has discussed in
detail why in his view the assessee's activities do not qualify as
charitable within the meaning of section 2(15). These issues pertain
to the merits of the appeal and are noted here only for background. It
is open to the assessee to advance all such contentions before the
CIT(A), who is the statutory appellate authority.
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5. The assessee has relied on the Hon'ble Andhra Pradesh High
Court's judgment in its own case for an earlier year. However, it has
not specifically demonstrated with supporting material that the
factual matrix for the year under consideration is identical. Such
issues, in any case, fall within the domain of the appellate authority
for adjudication, and cannot be conclusively examined in the present
proceedings.
6. Without prejudice to the above, it is emphasized that this office
cannot step into the role of the appellate authority and decide the
merits of additions made by the Assessing Officer. The assessee is at
liberty to advance all its arguments before the CIT(A) in the appeal
proceedings.
7. The additional contention of the assessee regarding the AO's
jurisdiction under section 143(3) read with section 12AB has been
duly considered. However, the validity or otherwise of the
assessment order and the scope of the AO's powers are matters to be
examined in appellate proceedings. While disposing a stay petition
under section 220(6), this office cannot assume the powers of
appellate authority. Such issues are squarely within the jurisdiction of
the appellate authority where the assessee's appeal is already pending.
Accordingly, this ground cannot be accepted as a basis for granting
full stay of demand without any payment.
7.1 Further, in this regard, reliance is placed on the decision of the
Hon'ble High Court for the State of Telangana at Hyderabad in the
Writ Petition No. 8794 of 2023 in the case of Zoos and Parks
Authority of Telangana vs. the Commissioner of Income Tax
(Exemptions), Hyderabad wherein the Hon'ble Court held that the ends
of justice would meet if the petitioner deposited a sum of Rs. 3 crores
within a period of fifteen days from the date of the order. Upon such
deposit, the demand raised by the respondents for the Assessment Years
2016-17 to 2021-22 was directed to remain stayed till disposal of the
appeals stated to be pending before the first appellate authority.
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7.2 Reliance is also placed on the decision of the Hon'ble High Court
of Andhra Pradesh at Amaravati in the writ petition No. 22770 OF
2025, dtd. 30.08.2025, in the case of Sasi Foundation vs. the
Commissioner of Income Tax (Exemptions), Hyderabad, wherein the
Hon'ble Court held as follows: (1) The impugned order, dated
23.08.2025 is modified to the extent that the petitioner shall deposit 10%
of the outstanding amount within a period of four (04) weeks from the
date of the order, and (2) The appellate authority shall dispose of the
appeal within a period of three (03) months from the date of receipt of a
copy of this order.
7.3 Reliance is also placed on the decision of the Hon'ble High Court
of Andhra Pradesh at Amaravati in the writ petition No. 23494 OF
2025, dtd. 04.09.2025, in the case of Moulana Minorities Welfare
and Educational Society vs. Union of India and Others, wherein the
Hon'ble Court held as follows: (1) The impugned order, dated
23.08.2025 is modified to the extent that the petitioner shall deposit 10%
of the outstanding amount within a period of four (04) weeks from the
date of the order; and (2) The appellate authority shall dispose of the
appeal within a period of three (03) months from the date of receipt of a
copy of this order.
8. Further, it is observed that the assessee's latest financials reflect a
bank balance of Rs. 53.79 crore as on 31.03.2025. No material has
been placed to show that the said balance is earmarked or otherwise
unavailable for meeting tax obligations. In these circumstances, the
claim of financial hardship is not substantiated, and it cannot be said that
the assessee is unable to make even a partial payment towards the
outstanding demand. During the hearing on 06.10.2025, the AR was also
asked to submit the bank accounts of the assessee along with respective
balances as on that date. However, by email dated 07.10.2025, only
account numbers were furnished, without balances. Thus, once
again, the assessee has not established any genuine financial
hardship.
9. In view of the above discussion, the assessee's request for complete
stay of demand without any payment cannot be accepted. Considering
5 HCJ (AKrS, J) & GMM, J
the assessee's contentions, the binding judicial precedents relied upon,
the CBDT guidelines and the financial position of the assessee, it is
necessary to strike a balance between the interests of the Revenue and
the assessee. Accordingly, out of the total outstanding demand, the
assessee is directed to pay a sum of Rs. 8,00,00,000/- (which is less than
the CBDT guidelines of 20%) for AY 2023-24 on or before 28.10.2025.
The assessee shall furnish copies of challans to the Assessing Officer
concerned, with a copy marked to the undersigned. Subject to such
payment within the stipulated time, recovery of the balance demand
shall remain stayed until disposal of the first appeal or 31.01.2026,
whichever is earlier,
10. In this regard, it may please be noted that, if the demand as stated
above is not paid on or before 28.10.2025, the stay granted as above,
will automatically stands cancelled without any further communication
and the Assessing Officer shall initiate necessary Income Tax
proceedings for recovery of the demand.
11. It may be noted that all other legal provisions of the Act like interest
payable on the outstanding demand u/s 220(2) etc, are applicable, in this
case irrespective of grant of the stay of the demand as mentioned above.
12. All stay petitions stand disposed of pursuant to this order."
3. Learned counsel for the petitioner submits that the
petitioner is a charitable organization which is entitled to
exemption under Section 11 of the Income-tax Act, 1961 (for
short 'the Act') as it carries out micro finance activity which is
a charitable activity not being a business in terms of Section
2(15) of the Act. The petitioner also has registration under
Section 12A of the Act. Reference is made to the judgment
dated 10.07.2013 passed by the erstwhile High Court of
6 HCJ (AKrS, J) & GMM, J
Andhra Pradesh in ITTA.No.304 of 2013 in the case of the
same petitioner. The learned counsel further submits that the
impugned order would lead to onerous financial hardship to
the petitioner as it is a charitable organization. It is further
submitted that CIT (Exemption) did not ask the petitioner to
provide a bank statement in the hearing on 06.10.2025 but
only the bank account numbers. Therefore, CIT (Exemption)
has not accorded due consideration to the grounds urged by the
petitioner by reiterating the earlier order dated 23.08.2025
directing the petitioner to make a partial payment of
Rs.8.00 crore. Therefore, the impugned order may be set aside
and stay of recovery of the impugned demand may be granted
pending disposal of the appeal.
4. Learned counsel for the Income Tax has opposed the
prayer. He has taken this Court to the contents of the
impugned order and submitted that the petitioner failed to
demonstrate the claim of financial incapacity to meet the tax
demand partially. The CIT (Exemption) has rightly observed
that contentions on merits are to be dealt with in the appellate
proceedings and not while disposing of the stay petition. The
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petitioner also did not show the bank balance in its accounts
during the course of personal hearing on 06.10.2025 to
demonstrate its financial incapacity. The direction to pay
Rs.8.00 crore is less than 20% of the total demand recoverable
as per CBDT guidelines for the relevant Assessment Year
2023-24. Therefore, this Court may refuse to interfere in the
impugned order.
5. We have considered the submissions of the learned
counsel for the parties.
6. A perusal of the relevant part of the impugned order,
extracted hereinabove, shows that the petitioner has not been
able to produce the bank statements reflecting the balance in
its accounts even during the course of hearing to make out a
case of financial incapacity. The bank statement of the
petitioner reflected the balance of Rs.53.79 crore as on
31.03.2025. The contentions as to the exemptions permissible
to the petitioner as a charitable organization are matters which
are pending before the appellate authority. Therefore, CIT
(Exemption) has refrained from making any comments
thereupon. The appeal is pending and in the absence of any
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serious financial incapacity, a direction to make partial
payment of Rs.8.00 crore which is less than 20% of the total
demand of Rs.53,74,67,120/- is commensurate with the
requirement of balance between the interests of Revenue and
the assessee during pendency of the appeal. Therefore, this
Court is not inclined to interfere in the matter. The appellate
authority would endeavour to dispose of the appeal in a
reasonable time-bound manner.
With the aforesaid observation, the instant Writ Petition is
dismissed. There shall be no order as to costs.
Miscellaneous applications, if any pending, shall stand
closed.
____________________________
APARESH KUMAR SINGH, CJ
_____________________
G.M.MOHIUDDIN, J
4th NOVEMBER, 2025.
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